Will Foxconn & Apple Deliver on Promises?

Apple Inc and its China manufacturing partner, Foxconn, recently announced an agreement to improve wages and working conditions at factories accused of being sweatshops. The announcement is in response to an investigation conducted by the independent Fair Labor Association (FLA) that found “serious and pressing” violations of China labor laws, identifying at least 50 breaches of China regulations.

Foxconn has come under scrutiny in recent years with abuses and violations reported by labor activist and various organizations since at least 2005. Pressure increased calling for an audit by the FLA after a series of suicides at some Foxconn factories and a report of 3 deaths and injuries to 70 employees following blasts at two iPad facilities, one owned by Foxconn. In response to the criticism, Apple agreed to the FLA audits. The FLA report confirms what had previously been reported that working conditions are deplorable and workers have virtually no rights.

While this agreement to improve working conditions is a step in the right direction the real test will be whether Foxconn and Apple deliver on their promises. And while Apple is in the spotlight to put the pressure on Foxconn it’s important to remember that Foxconn’s other high profile clients include Dell, HP, Amazon Kindle, Intel, Cisco, Sony, among others.

In what might over time prove an ironic replay of history, through the efforts of Students & Scholars against Corporate Misbehavior (SACOM) and others, the Chinese workforce appears to be awakening to the potential values of collective bargaining, something our labor activist ancestors discovered while struggling against similar working conditions found in China and elsewhere today and formed trade unions that launched the labor movements of the late 18th and early 19th century. Today collective bargaining is fast becoming a relic of the past in the U.S as we seem uninformed of our past and unions find themselves mostly despised.

SACOM is a nonprofit organization founded in Hong Kong in June 2005 that originated from a students’ movement devoted to improving the labor conditions of cleaning workers and security guards under the outsourcing policy. SACOM aims at bringing concerned students, scholars, labor activists, and consumers together to monitor corporate behavior and to advocate for workers’ rights. SACOM believes that the most effective means of monitoring is to collaborate closely with workers at the workplace level. They team up with labor NGOs to provide in-factory training to workers in South China. Through democratic elections, they support worker-based committees that can represent the voices of the majority of workers.

SACOM has been tracking the working conditions and work ethics at Foxconn and other Chinese factories. As Foxconn moves into inner China, SACOM continues tracking the working conditions of the new Foxconn production sites to ascertain the workplace improvement in place, if any. Their findings were detailed in this May 2011 report:

[A SACOM] Researcher (R) met Ah Ming (M), a 19 years old male worker, at the entrance of southern campus in Chengdu. At that time, Ah Ming was having a dinner break and he bought some food from the vendors outside Foxconn like many other workers did. He is a graduate from a tertiary school. He wants to be an engineer at Foxconn but was assigned to the production line.

R: When did you start working at Foxconn?

M: Since February.

R: What do you do at Foxconn?

M: I produce case for tablet PC.

R: Is it case for iPad?

M: Yes.

R: What do you do exactly? Molding iPad case?

M: I work on assembly line to assemble the case.

R: Do you find the work relaxing?

M: It isn’t relaxing at all! It’s exhausting. I have to stand at least 14 hours a day.

R: Do you have lots of overtime work?

M: I wake up before 7:00 am. Then I have to queue up for bus to the factory. The bus is overcrowded. The work shift starts at 8:30 am, and I have to arrive at the factory at 8:00 am.

R: Is it because of the work meeting?

M: We have to assemble in the factory every day. At noon, we have to queue for at the canteen for a long time. Basically, we have to stand throughout the day, no matter when we going to work or going back to dorm. When we arrive at the dorm, it’s already 9:00 pm.

R: Oh…it’s really tiring. What will you do on the rest day in a week?

M: I have been here for half-month, but I haven’t got time for fun.

R: Do you mean there is no rest day on the weekends?

M: Although it states that there are 2 days-off, but I haven’t got a day off.

R: How many overtime hours do you have since you worked here?

M: We have 2 hours overtime work on every weekday. On the weekends, it’s 10-hour overtime work.

R: Have you ever tried to decline overtime work due to exhaustion?

M: Yes, I did. The company says overtime work is voluntary, but if I don’t stay for overtime work, it will be regarded as work stoppage.

R: Have you ever lodged a complaint for the forced overtime work?

M: No. I plan to resign.

R: Why?

M: I just like a robot repeating the same motion. I don’t have to use my brain. The time passed too slow. In addition, I have to stand during work.

R: What Foxconn should improve?

M: I don’t understand why we can’t sit. And we can’t bring our cell phone to the shop floor. Even the cell phone without camera is prohibited.

R: What do you want to do after the work shift ends?

M: It’s routine. Sleep, work and eat.

R: Some workers said they felt depressed did not want to talk to others after finishing their work.

M: It’s also because some of the roommates are on different shifts.

R: Can you get along well with your roommates?

M: Our room accommodates 6 persons. I only know 2 of them. The others I haven’t met them at all. When I am on day shift, they are on night shift, vice versa.

R: Thank you for your time!

Taiwanese owned Foxconn Technology Group is the world’s leading electronics manufacture. Foxconn contracts with a number of MNC, notably Apple, HP and Dell. Foxconn has a workforce of 1 million workers spread across China but mainly concentrated in three provinces, Shenzhen, Chengdu, and Chongqing. Predominantly the majority of its workforce is young peasant-workers from the surrounding countryside. Based on April 2011 figures and depending on the location of the factory workers earn a basic salary of CNY1300 (U.S. $207) to CNY 1590 (U.S $252) per month. The regular working hours per month are 174 as determined by the government, 8 hour/day x 21.75 days. At the Chengdu factory, where mostly Apple’s iPads are assembled, workers usually have 80 -100 hours overtime on top of the 174 hours of regular hours. The basic salary alone does not provide a living wage so workers depend heavily on overtime hours. Cost of living, again depending on the province, ranges in U.S dollars from $348 to $433.

Some U.S company CEO’s and former CEO’s tell the truth about outsourcing but the typical corporate spin justifying it is not because of cheaper labor but because the workers are better educated. And sadly too many believe this crap. While it may be true that workers receive a better education in countries like China and India compared to the U.S. the fact remains that this overseas labor is very cheap and generates huge profits for multinational companies (MNC).

Anyone with basic math skills can easily calculate the profit windfalls for companies like Apple, Dell, and HP, etc. Perhaps those who still believe this myth lack such basic skills thus lending credence to the myth.

One million workers earning a basic salary of $252 per month equates to $1.45 per hour is a lot of cheap labor that drastically reduces the cost of production. Compare this to the regular hourly rate for U.S. factory workers that range from $8.15 – $17.86 an hour. The U.S federal minimum wage is currently $7.25 per hour and differs from state to state. Here’s a map of the U.S at Jared Bernstein’s blog that shows how many hours U.S workers earning minimum wage need to work just to pay rent, not including food. In no state can a minimum wage worker afford a 2 bedroom unit at fair market rent working a standard 40 hour work week. The full report Mr Bernstein is referencing to is accessible here.

There are 100,000 workers at the Chengdu Foxconn factory, which mostly assemble iPads, earning a basic salary of CNY1300 (U.S. $207) – $1.20 per hour. The iPad3 is selling on Amazon for about $540. With a basic salary of $207 it requires over 2 and half months of wages to afford one.

The toy industry in China employs four million workers and produces 80% of the toys sold worldwide and 90% of the toys imported into Europe. 4,000 Chinese factories work for subcontractors Mattel and Disney, among others. At Sturdy Products in Shenzhen, which manufactures Mattel’s Hot Wheels toy cars some 6,000 workers work 12 hours a day, six days a week, for staggeringly low wages. According to Sacom:

Wages are kept at extremely low levels, due to production quotas that are almost impossible to complete.

At the factory, which in 2010 exported more than $30 million worth of toys, the workers receive CNY1283 (U.S. $204) per month, the minimum wage. By working overtime they can expect to reach CNY 2723 (U.S. $433) each month.

If the math alone doesn’t bust the “better educated” nonsense than consider that these 5 million Chinese jobs are predominantly assembly line factory positions with workers standing all day on assembly lines doing repetitive job functions day after day. I don’t mean this in a demeaning way but these are entry level jobs with the majority of the workforce young peasant-workers. To assist Foxconn in recruiting for example, Chinese government offices in the areas were the factories are located often resemble labor agencies and actively recruit workers, most are young aged 16 – 30.

I feel compelled to point out the obvious; here we are only discussing one major Chinese electronics manufacturer, Foxconn, and the vast toy industry in China whose primary clients are American companies that combine employ 5 million workers, the majority of which, at one time, were American jobs performed by American workers. From 2000 – 2011 the U.S lost 5.4 million manufacturing jobs. Between 2002 and 2006 while the U.S was losing manufacturing jobs at an unprecedented rate, China’s manufacturing employment rose by an astounding 11 million workers. Today, direct manufacturing within the U. S contributes $1.7 trillion to GDP and employs 12 million workers. In just 4 short years China created, with the help of American MNCs, as many manufacturing jobs as exist in the U.S today.

The loss of U.S. jobs across the spectrum of U.S manufacturing vulnerable to outsourcing is sizable. One study found that between 1972 and 2001, industries most vulnerable to import competition from low?wage countries saw a decade?long decline in employment on average of 12.8 percent, while industries less vulnerable to competition saw on average a 2.3 percent increase in employment. (See Chart)

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Perhaps an argument could be made that in addition to the profit magnetism of cheap overseas labor another attraction might be that the workforce appears more easily controlled and manageable. Reports indicate that Foxconn for example employs military style training with new hires and apparently prefers female workers because they can be easily controlled. At Foxconn the content of this military style training is mainly standing – workers are required to stand as still as a soldier for hours – in preparation for the long hours of required on the production lines.

While the agreement announced by Foxconn and Apple is a beginning, reflecting back on history, the battle to improve working conditions and standardize worker rights around the world, as experienced during the 18th and 19th century, will prove a long enduring one for sure.